71903016 and 71803147) and MOE (Ministry of Education in China) Project of Humanities and Social Sciences (grant no. After overcoming a difficult and controversial beginning, Victoria's first private toll road has generated $5.78 billion in revenue since it opened in . TCA is comprised of two Joint Powers Authorities formed by the California legislature in 1986 to plan, finance, construct and operate the 73, 133, 241 and 261 Toll Roads in Orange County. California Route 241 has always been considered "premier" by California residents but was recently acquired by the Australian Infrastructure Fund (AIXF) for $130 million. B. H. Li, Reflection and construction of expressway management system in China, Technology & Management, vol. Column (II) reports the impact of toll road density on scale efficiency of toll road industry (). In recent studies, the estimated administrative monopoly degree of toll road industry is about 88.64% [47] or 81.8% [37], and the rent dissipation degree of government loan-repayment highways caused by administrative monopoly is about 63.5% [48]. A vignette system may offer other advantages: it may be economical to administer; it would help overcome the criticism of toll variability by automatically equalizing the cost of accessing Expressways across a Province; it would provide an incentive to users to maximize utilization of the Expressways rather than use less safe and more congested parallel roads . All operators are under the auspices of Toll Road Regulatory Agency (Badan Pengatur Jalan Tol, BPJT) of the Ministry of . 34, no. Some governmental loan-repayment highways are directly managed by nonprofit highway authorities under the provincial Department of Transportation; most governmental loan-repayment highways are centrally managed by operating highway group companies under the provincial Department of Transportation or State Asset Regulatory Commission. His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.You can read more about Kyith here. Over the years, nonprofit highway authorities have been restructured as enterprise groups, and regional transportation authorities have roughly developed two operation management systems for provincial governmental loan-repayment highways. M. C. Naughton and R. Frantz, X-efficiency, rent-seeking and social costs: comment, Public Choice, vol. They figured that the 4.45 trillion yuan loan debt requires annual interest payments of 267 billion yuan and principal payments of 300 billion yuan. K. R. Shen and G. Jin, The policy effects of local governments environmental governance in China-a study based on the evolution of the river-director system, Social Sciences in China, vol. C. Xu, The fundamental institutions of Chinas reforms and development, Journal of Economic Literature, vol. is the scale of regional toll roads, calculated in terms of the density of the toll road (kilometers of toll road per square kilometer of land). Road infrastructure has a very long life if maintained properly. E-470 Toll Road is owned and maintained by the E-470 Public Highway Authority Pikes Peak Highway is owned and maintained by the city of Colorado springs. Z. Q. Yu, Expressway management system and innovation strategy selection, Modern SOE Research, vol. Register in seconds and access exclusive features. But, Hilton isn't exactly 1005 American-owned, either. to incorporate the statistic into your presentation at any time. [33] conducted an empirical study and found that the impact of private hospital entry on the efficiency of the medical industry is not significant. People were incredulous that the toll roads could be making a loss while high toll fees were being charged to drivers. Thereafter, it will form a critical source of funds for operating and maintaining these most valuable assets in good repair and rehabilitating them when it becomes necessary, as it certainly will. 37, no. Therefore, no significant scale effect has emerged in the toll highway sector over a long period. * Figures from 2017 to 2019 were retrieved from previous reports. J. Rosell and A. Saz-Carranza, Determinants of public-private partnership policies, Public Management Review, vol. The five expressways are located in the provinces that are expected to benefit from the sustainable economic growth and strategic development of China. In that way, financial and other interests can be balanced and the most appropriate toll rates adopted. We want to create the conditions and gauge market support, he says. But with a higher dividend payout, it can raise its valuation so that it can tap equity and do a combination of internal funds, equity financing and bank borrowing for an acquisition, he says. 4, pp. This conclusion has been widely questioned in the practice of Chinas toll highway sector. If you are an admin, please authenticate by logging in again. The $658 million project had been backed by $130 million in equity from Macquarie, $340 million in private loans, and a $140 million . Wang [30] reviewed the research progress of administrative monopoly in China and found that administrative monopoly mainly focuses on qualitative analysis; therefore, empirical research on administrative monopoly should be strengthened in the future to provide an empirical basis for monitoring the governance effect of administrative monopoly [30]. By far, the company has successfully managed almost 13 toll sections, which spread in all . If maintenance is inadequate it can deteriorate quite rapidly, particularly in adverse climates or with high axle loads. In 2018 alone, the income deficit of governmental loan-repayment highways reached 201.85 billion yuan. There have been five U.S. leases of toll roads under a long-term public-private partnership concession agreement. Chinas toll road system is a profitable monopoly industry. Jiang Yanfei, CEO of toll-road operator China Merchants Holdings (Pacific) (CMHP), is on a fundraising drive to finance the recently completed acquisition of the Yongtaiwen expressway in eastern China. 4953, 2010. 5768, 2014. [16], Li et al. Are non-toll road loans, and even urban road loans, also included in the toll road repayments? Accessed January 18, 2023. https://www.statista.com/statistics/759636/china-percentage-of-toll-roads/, Ministry of Transport of China. "Percentage of toll roads in the overall road mileage in China from 2014 to 2020." The academic literature widely accepts that highway infrastructure can promote regional economic development. Chinas decentralized institutional and funding mechanisms for delivery of the Expressway network have been instrumental. Now, Jiang is seizing the opportunity to drum up interest in CMHPs shares. 63, no. 5358, 2008. Launched in 1990, the program to build the NTHS has delivered an Expressway network of nearly 85,000 km, Class-I highway of 68,000 km, and Class-II highway of 320,000 km, Expressways are multi-functional facilities, used by private cars, public buses and coaches, taxis, paratransit services, own-account goods transport, commercial road haulage services and emergency vehicles (ambulances, police vehicles, fire trucks). Use of a common tolling system by Provinces may also have some advantages, and cost-effective to administer. The excuse that the loan needed to be repaid and that there were huge maintenance fees has been used by central and local transportation management departments for a long time to quell public anger. 1, pp. Oso Parkway Bridge opened to drivers, pedestrians and community on January 13, 2021. Finally, Provinces that have a number of soundly-performing toll roads, but faced with demands for other new roads to meet growing traffic needs, might wish to consider concessioning existing roads for a period of time to private companies. [Online]. The government should take the initiative to withdraw from specific business areas, weaken the degree and scope of the administrative monopoly, and focus on industry regulation. Tolls are justified even after loan is repaid. Z. Zhao, The rise of public-private partnerships in China: an effective financing approach for infrastructure investment?, Public Administration Review, vol. Access to this and all other statistics on 80,000 topics from, Show sources information Aussie drivers have helped toll road owner Transurban Group more than double its profit to $468 million in the last financial year. 5 min read. It has a market capitalization of $337 million compared with Hong Kong-listed Jiangsu Expressways HK$31.6 billion, Zhejiang Expressways HK$18.4 billion and Sichuan Expressways HK$14 billion. As noted, toll collection is currently decentralized based on the tolls established of individual companies or in some cases based on a provincial system under which tolls are collected by the Province and reallocated to the companies operating in the Provinces. IBM: Personal Computer Divison. Toll roads, especially near the East Coast, are often called turnpikes; the term turnpike originated from pikes, which were long sticks that blocked passage until the fare was paid and the pike turned at a toll house (or toll booth in current terminology). 182184, 2014. Social capital is financed, constructed, and operated under the governments franchise system, breaking administrative monopoly in the form of publicprivate cooperation. This is because the cash flow of toll-road operators is higher than their net profit, Says Yong. Currently, 82.5% of CMHP is owned by a unit of China Merchant Group. That is, the increasing road scale has an effect on the promotion of total factor productivity in the industry, but excessive administrative intervention greatly reduces the economies of scale. Specifically, the government plans to phase out toll collection on Class 1 highways, where the speed limit is capped at 80kph. Some media did a hypothetical loan repayment calculation based on a 5 year or longer loan with an interest rate of 6 percent. 333, no. Y. Pu and H. F. Wang, Effect mechanism of ownership structure on technical efficiency of agricultural listed company, Technology Economics, vol. It is by far the largest asset that CMHP has in its portfolio and will provide a massive boost to its revenue and earnings from 2H2011. Yong of DBS Vickers says that withholding dividends in order to preserve cash wont really help CMHP, because it would be at least three years before CMHP has saved enough for an acquisition. Mao et al. At the provincial level, the ratio of general budget expenditure in local public finance to regional gross domestic product is used as the proxy variable of administrative monopoly [21, 47, 70]. The unique management system of toll highways produces the market structure and property rights structure with Chinese characteristics. 1, pp. Yong says that CMHPs announcement of an interim dividend of 2.5 cents a share for 1HFY2011 also helped stoke the positive sentiment. 3951, 2013. You can only download this statistic as a Premium user. R. Z. Pang, B. L. Liu, and T. Wang, Location, enterprise scale, ownership structure and cost efficiency: an empirical study based on 19 listed expressway enterprises in China, Journal of Central University of Finance & Economics, vol. Unlike the tolls in neighboring Florida and Georgia, Alabama toll roads and bridges are privately owned and operated. Evidently, scale growth is not completely transformed into efficiency improvement. In economic terms a similar argument can be made; after an Expressway has been built, the capital cost of construction having been sunk (and irrecoverable) it can be argued that it makes sense to set tolls equal to short-term marginal cost only and maximize use of the new infrastructure. Collection of tolls is a significant part of the cost of operating an Expressway, particularly as each new section involves a different company. Guihuang expressway is a good asset. That pushed its gearing up from zero to 40%. Ministry of Transport of China. H. C. Xu and P. R. Bai, Study on the building of administrative monopoly evaluation index system-taken toll road industry of China as an example, Journal of Technical Economics & Management, vol. In China, there is a special economic relationship between the central government and the local governments. Roads in China may refer to Expressways of China, China National Highways, International Roads to China, as well as other streets and roads in China. Evidently, the inherent administrative monopoly in the toll highway sector, if controlled to an appropriate extent, can promote the development of the sector. Learn how your comment data is processed. [15], Zhang et al. Indeed, Jiang says it would be safe for CMHP to raise its gearing to 60%. 4, pp. The Malmquist model of the global reference proposed by Pastor and Lovell [69] is a Malmquist index calculation method. According to the Outline for Building Chinas Strength in Transportation (dated September 2019), jointly released by the Central Committee of the Communist Party of China and the State Council, the transport sector should adjust its focus from speed and scale to quality and efficiency. Less than a decade after a foreign consortium paid Indiana $3.8 billion for the 75-year rights to collect tolls along the Hoosier State's 157-mile Indiana Toll Road, the private firm is bankrupt . Provincial governments finance most road construction through debt, which is to be repaid by tolls. 41, no. Yong is also confident that CMHPs high dividend yield of 8%, based on a projected distribution of five cents a share for the full year, would tempt more investors to buy more of the stock. There would be at least $1.1 billion worth of new and refurbished toll roads: two connected segments in the Katanga region and another from Kinshasa to the country's main port of Matadi.. This is particularly so in countries like China which can anticipate continuing strong traffic growth for the foreseeable future, particularly in the flows of heavy freight trucks which are one of the main contributors to road wear and tear. The Expressway network has transformed the efficiency and effectiveness of inter-regional road transport in China. Some media did a hypothetical loan repayment calculation based on a 5 year or longer loan with an interest rate of 6 percent. Currently, our PRC toll road portfolio comprises five expressways spanning approximately 334 km in four provinces including Hebei, Hunan, Shanxi and Anhui. 8, pp. It all started with the vision, hard work and horse and cart of one man - Albert Toll. 266271, 2005. In particular, governmental loan-repayment highways have such characteristics as franchising, monopoly, and one highway by one company. Hence, this study concentrates on the relationship between economic performance, administrative monopoly, and scale efficiency with respect to toll highways, and explores how the China-specific administrative monopoly affects the transformation of toll highways from scale to efficiency. 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